The Securities and Exchange Board of India issued a consultation paper on 11 August 2026 proposing to extend the SEBI (Vault Managers) Regulations, 2021 from gold deposited for Electronic Gold Receipts to all bullion underlying SEBI-regulated instruments, including exchange-traded funds and derivatives on bullion. The draft defines bullion as gold, silver or any other precious metal underlying such an instrument, raises a vault manager’s minimum net worth from ₹50 crore to ₹75 crore, and attaches a circular that would rescind the Master Circular for Electronic Gold Receipts of 24 June 2024. SEBI’s Commodity Derivatives Advisory Committee recommended both proposals at its 20th meeting in August 2026, and public comments closed on 1 September 2026.
The paper records that metal backing ETFs and physically settled derivatives sits in commercial vaults under contractual arrangements outside the Regulations; a new Regulation 2(3) bars any entity from using an unregistered vault manager to store it. Regulation 13 would hold that bullion apart from a vault manager’s other business and segregate it instrument-wise and entity-wise. The title provisions become product-neutral: a vault manager may not create an instrument or deposit bullion in its own name, may not sell, remove or pledge deposited bullion except as SEBI specifies, and must prove a lawful excuse if it refuses to hand bullion to its owner. Reconciliation runs against the records of the depository, the clearing corporation or the asset management company and its custodian, and a discrepancy left unresolved is the vault manager’s liability.
For Electronic Gold Receipts, segregation stops at the instrument. The draft circular keeps receipts fungible and unlinked to a bar’s reference number: the vault manager records bar number and refiner at deposit, the receipt carries quantity, weight and purity, and gold lodged against one receipt may be delivered against another, from a different location or vault manager, in the exchange’s deposit unit. A holder may commission an assay at withdrawal through an assayer empanelled by the clearing corporation, at the holder’s cost; once the gold leaves the vaulting infrastructure, the framework resolves no quality dispute. Regulation 12(1) would require every deposit to have never exited from the vaulting system, which a bar once withdrawn cannot meet on return, and for receipts new gold enters only as imports through agencies nominated by the Directorate General of Foreign Trade or from exchange-accredited domestic refineries.
The amendments take effect on the thirtieth day after publication in the Official Gazette, once approved by the SEBI Board; the draft circular leaves the meeting date blank. What an ETF must hold remains set by the SEBI (Mutual Funds) Regulations, 2026, and delivery against a contract by exchange bye-laws and clearing corporation rules.